Trash cans could land Toronto in court as former bin provider seeks $60M over failed ad scheme

As Toronto girds for trial in a lawsuit that claims $60-million from the city over a failed garbage bin advertising scheme, a trend is emerging among the city’s trash cans.

It is not that they are frequently unsanitary, sticky under a residue of rancid pop, and attended possessively by hornets. That much is already obvious.

Likewise, anyone can see that Toronto’s current fleet of pod-like pedal-operated bins is technically complicated, so much that they often malfunction, which anywhere else would seem a far-fetched problem for a garbage can. As a city report describes it, “typical problems have included broken foot pedals, sticky flaps, damaged ashtrays, missing doors/panels, broken locks and missing decal.”

“There’s no reason for a garbage can to not actually work, right, unless it’s full,” said Matthew Blackett, editor and publisher of Spacing magazine, and a member of a city roundtable that looked at its “street furniture.”

Rather, what the increasingly acrimonious lawsuit by Toronto’s former street bin contractor EcoMedia (it claims breach of contract, fraudulent and negligent misrepresentation, trespass, breach of duty of good faith and unjust enrichment, among others) seems to illustrate is that, for Toronto’s streets, garbage cans are more trouble than they are worth.

Astral Media, for example, the company that runs the current ones, along with bus shelters where it sells ads, has had to do a “complete re-eingineering of all moving parts susceptible to wear and vandalism,” at nearly $3,000 per bin, according to the city.

But the real alleged fiasco in Toronto’s street garbage collection reached its climax during the 2009 summer garbage strike, when the street bins were silver boxes — as opposed to the pods used now — and still run by EcoMedia, formerly Eucan. That storyline is only now becoming clear in court documents, in which the city says it has lived up to its deals, while EcoMedia argues that Toronto’s “wrongful and illegal acts were in wilful, wanton, reckless, high-handed, contemptuous, and contumelious disregard of [EcoMedia’s] rights and interests and the damage that would be caused…”

It’s truly been a hodge-podge of stuff that’s come down the pipe

It began with high hopes in October, 1999, when Toronto signed the first in a series of deals with a private company to provide “Silver Bins,” with three streams for waste collection and recycling. Four years later, the company was bought by a Mexican firm, became Eucan, was sold again to Ontario-based Pro-Kyoto International, and became EcoMedia, as it remains today, with operations in smaller municipalities and university campuses.

In its due diligence inquiries before buying EcoMedia, Pro-Kyoto discovered that, under the contract, it would owe Toronto nearly $5-million in fees. The city was keen to collect this debt, according to EcoMedia’s claim, but had also adopted a new advertising policy, undisclosed to EcoMedia, according to which it would refuse every request for a new bin and basically deny EcoMedia its core business.

EcoMedia claims this policy “was expressly intended” to deny it benefits of its contract, and to “fraudulently” conceal from Pro-Kyoto the fact that it was buying a company with no future in Toronto, just so it could collect its debt.

The city denies this was a secret, and alleges EcoMedia was aware of the new policy.

The deal went ahead, the Mexican company got away clean, Pro-Kyoto covered the debt, and allegedly thought it had a future in Toronto’s garbage bin advertising market.

Then came June 2009 and the garbage collection strike, when the city “unilaterally proceeded to place paper ‘out of order’ signs on all Silver Bins and to wrap transparent ‘shrink-wrap’ around the top portions thereof where the slots for garbage and recycling were located,” according to EcoMedia’s claim.

This was not in the contract, and “wholly ineffective,” they allege. People tore off the wrap, or left trash alongside. Soon the Silver Bins were overflowing mini dumps, “left in very poor and unsanitary condition,” the claim states.

In due course, EcoMedia’s customers saw their ads on the national news, half-covered with garbage. The company lost Rogers as a client, then Re/Max.

“The strike was an act beyond the reasonable control of the City,” the city claims in its defence.

“Those things [Silver Bins] were just horrible,” Mr. Blackett said. “The entire premise was not built on capacity to store garbage, it was to get eyeballs looking at them.”

“Advertising on garbage bins is ridiculous and unneeded,” he said. “When you start to give a secondary purpose to a piece of street furniture like that, that purpose ends up becoming more important than the actual real function of it. If a garbage bin is to collect garbage, that’s what it should do, right? It should not be positioned in a way that makes it better for advertisers to sell their products, and that’s what was happening, and it was happening all over the city.”

Since 2007, the city has had a 20-year agreement with Astral Media to provide about 25,000 pieces of street furniture, including transit shelters, garbage bins, benches, info pillars, and public washrooms.

“Some issues” are currently being re-negotiated, but the city calls it an “innovative partnership” of “unprecedented” scale, which has already brought in $70-million and guarantees the city at least $429-million over 20 years. A $200-million capital investment has grown in value by 50%, the city reckons.

“We were able to take advantage of the fact that all of these contracts [for different kinds of street furniture] had expired and put it together into one contract with a co-ordinated system of street furniture,” said Elyse Parker, director of the public realm section of transportation services. “Astral has been providing their revenue as set out in the agreement.”

Related

In a recent decision of Ontario Superior Court, EcoMedia was granted permission to amend its statement of claim. Now, barring a settlement with the city, the next step is to set a date for trial.

No matter what the eventual cost to the city, however — whether mere lawyers fees or millions of dollars in damages — it will be just the latest bill come due in Toronto’s endless street-level garbage game.

As Mr. Blackett described the city’s history with its pedestrians and their waste: “It’s truly been a hodge-podge of stuff that’s come down the pipe.”

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